Why Google Stock Is Suddenly Affordable
If you every wanted to buy a stake in Google now is the time. Google stock has suddenly become super affordable.
This article is more than 2 years old
Google stock was worth $2,200 per share last week. Now, the same share is worth $110, far more affordable for the average consumer. How did this happen? A massive stock split that occurred on Monday has plummeted the price by a 20-to-1 margin.
Alphabet, Google’s parent company, split two classes of Google stock, consequently reducing the price. Even with this humungous reduction, Alphabet has remained stable in its stock market value. The company is currently valued at $1.5 trillion, one of the highest values for any firm worldwide. Due to its lucrative subsidiaries, it’ll take an unusually devastating factor to permanently effect the company’s value.
Why did Alphabet decide to split the two classes of Google stock? This type of split has a few beneficial outcomes for the parent company. A move like this could attract investors by reducing stock shares to a more affordable price. A $100 share is less risky than spending thousands of dollars in a turbulent marketplace. A lower price for a continually purchased stock also helps Google get on the Dow Jones Industrial Average.
The Dow Jones Industrial Average is an index that includes 30 of the most prestigious companies and their stock prices. It measures the general stock market’s profitability with hourly updates. Unlike the S&P 500, the Dow takes giant corporations with varying stock prices to make up the average. This means that newly affordable Google stock could be included on the smaller end of the monetary spectrum. Google being added to the Dow indicates prestige and value, which is a positive move for any corporation.
Apple made a similar move to Alphabet back in 214. When Apple split its stock shares, its stock prices dropped. Soon after, the company was finally added to the Dow in 2014. The Dow currently includes some of the most revolutionary and innovative companies, like Apple, Microsoft, and IBM. It’s a no-brainer that Alphabet would want to split its Google stock for a chance to join the Dow Index. Amazon is also vying for Dow’s attention, with a recent stock split parallel to Google’s 20-to-1.
Amazon’s stock split is reminiscent of other giant corporations’ stock divides in previous years. The company is valued just below Alphabet, with a $1.2 trillion net worth. Amazon’s value is nearly double the combined net worth of Walmart and Home Depot, two retailers that have been prominently featured in the Dow. Google stock and Amazon stock that have been split haven’t affected the corporations’ overall value and could get them featured on the coveted index.
Many other companies noticed Google stock splitting and are attempting to do the same. Both Tesla and GameStop have announced that they plan to divide their stock to incentivize future investors. This trend may continue to other companies with a lower net worth than Amazon and Alphabet if it successfully draws in more funds and better value.
A Google stock split could help Alphabet join the Dow ranks with its competitors. With the marketplace in a perilous situation, companies are doing everything possible to attract new investors.
